Why is it desirable to design tests of details of balances before performing tests of controls and substantive tests of transactions? State the assumptions that the auditor must make in doing so. What does the auditor do if the assumptions are wrong?

For each of the eight types of evidence discussed in Chapter 7, identify whether it is applicable for risk assessment procedures, tests of controls, substantive tests of transactions, substantive analytical procedures, and tests of details of balances.
13-11 (OBJECTIVE 13-2) Rank the following types of tests from most costly to least costly:
substantive analytical procedures, tests of details of balances, risk assessment procedures, tests of controls, and substantive tests of transactions.
13-12 (OBJECTIVE 13-3) Assume that the client’s internal controls over the recording and classifying of fixed asset additions are considered deficient because the individual responsible for recording new acquisitions has inadequate technical training and limited experience in accounting. How will this situation affect the evidence you should accumulate in auditing fixed assets as compared with another audit in which the controls are excellent?
Be as specific as possible.
13-13 (OBJECTIVE 13-3) Table 13-3 (p. 427) illustrates variations in the emphasis on different types of audit tests. What are the benefits to the auditor of identifying the best mix of tests?
13-14 (OBJECTIVE 13-4) Explain the relationship between the methodology for designing tests of controls and substantive tests of transactions in Figure 13-5 (p. 429) and the methodology for designing tests of details of balances in Figure 13-7 (p. 431).
13-15 (OBJECTIVE 13-4) Why is it desirable to design tests of details of balances before
performing tests of controls and substantive tests of transactions? State the assumptions that the auditor must make in doing so. What does the auditor do if the assumptions are wrong?
13-16 (OBJECTIVE 13-4) List the nine balance-related audit objectives in the verification of the ending balance in inventory and provide one useful audit procedure for each of the objectives.
13-17 (OBJECTIVE 13-5) Explain the relationship between the occurrence transaction-related audit objective and the existence and completeness balance-related audit objectives.
13-18 (OBJECTIVE 13-5) How might the performance of test of controls provide evidence related to the presentation transaction-related audit objective?
13-19 (OBJECTIVE 13-6) Indicate the four phases of the audit process. In which phase does the auditor perform tests of controls?
13-20 (OBJECTIVE 13-7) Why do auditors often consider it desirable to perform audit tests throughout the year rather than wait until year end? List several examples of evidence that can be accumulated before year end.

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